Markets post best gain in 5 months; techs up

Mumbai: Continued foreign fund inflows propelled Indian shares to post their best single-day gains in five months and close 2.4% higher on Wednesday, with firm world equities also supporting the bullish sentiment.

Outsourcers gained on expectations of strong September quarter earnings, with bellwether Infosys Technologies set to unveil its results on Friday. Infosys gained 2.5%.

The 30-share BSE index closed 484.54 points higher at 20,687.88 points, with 28 of its components closing in the green. The 50-share NSE index gained 2.4% to 6,233.90 points.

The benchmark has risen 18.5% so far in 2010. It is only a sniffing distance away from its highest levels since January 2008 and around 500 points short of registering a new record high.

Foreign funds have poured in $21.7 billion into Indian equities year to date.

“Our market today was buoyed by overnight indications from the Fed that they may print more money and thereby more liquidity will come in, driving emerging markets further," said Sandip Sabharwal, CEO of portfolio management services at brokerage Prabhudas Lilladher.

World stocks rose on increasing expectations that the U.S. Federal Reserve will ease policy to support the economy. MSCI’s all-country world equity index was up 0.7% at 4:00pm.

Betting on a recovery in Europe or on continued strength in emerging markets could yield lucrative bargains and be safer than standing pat in the United States and risking a double dip, hedge fund managers said in New York on Tuesday.

Indian stocks have outperformed their BRIC peers Brazil, Russia and China so far in 2010.

“On results, the concerns are, we have factored in all likely positives. But, have not counted in any likely negatives," Sabharwal said referring to the September-quarter earnings season that starts ticking this week.

This month, RBS Equities said it expects healthy 6-7% dollar revenue growth for the top four outsourcing firms, with about 1% cross-currency tailwind.

The brokerage also said it expects profit after tax of the top four to improve 8% quarter-on-quarter.

Financials gained as investors were optimistic about the loan demand outlook in a fast-expanding economy. Leading lenders State Bank of India, ICICI Bank and HDFC Bank rose between 1.9% and 2.5%. Mortgage lender Housing Development Finance Corp rose 4.6%.

Metal producers rose sharply mirroring a huge jump in base metal prices. Copper prices in London and New York extended gains to touch 27-month highs, while Shanghai zinc futures hit their highest since April, buoyed by a fall in the dollar and expectations of US stimulus measures.

Energy conglomerate Reliance Industries rose 1.7% as it tried to catch up with the broader market.

The stock, which weighs the most on the Sensex, has lagged the market year-to-date as a lack of any near-term triggers led to a decline of 1.6%.

Advancing shares led declining ones in a ratio of 1.8:1 on a robust volume of 584 million shares.

STOCKS

Water treatment firm VA Tech Wabag closed at Rs1,709.40, up 30.5% from its issue price of Rs1,310 a share. It had listed at Rs1,662.

Mahindra & Mahindra rose 2.8% to Rs735.70 after its vice-chairman Anand Mahindra said the automaker expects to sign a final agreement to buy South Korea’s loss-making Ssangyong Motor Co Ltd by December as it starts pricing negotiations.